I just got my AVR_ISPv2 and have successfully programmed a stand-alone AVR without using arduino libraries. I did this with ONLY the ISP and not the FTDI chip common to arduino boards. I did this via a command line as well as Xcode on a Mac.

When I read this great writeup on standalone AVR programming (http://arduino.cc/en/Main/Standalone), it appears that I need both the ISP AND the FTDI interface to program using Arduino libraries. Is this correct or can I just use the ISP alone to program a standalone AVR chip and use the arduino libraries?

I was able to use the Arduino IDE to burn the bootloader with my ISP, however I was not able to burn the program to the AVR with it. Can it be done?

The Arduino libraries do not rely on the bootloader so you can program an Arduino using the ICSP interface instead of a serial cable. Be sure to "Burn Bootloader" at least once to set the fuses correctly. After that you can use "File->Upload using Programmer" to upload your sketch.

Note that doing so erases the bootloader so if you do it on an Arduino you wont be able to do the normal Upload sing the serial bootloader until you re-burn the bootloader.